Details of ComCom’s retail banking probe awaited

photo: Royal Bank of New Zealand

The UK Business Committee will publish its much-anticipated final report on competition in retail banking on Tuesday.

It is Draft report finds lack of competition in sectorthe market is divided into two tiers, mainly dominated by the four major Australian banks ANZ, ASB, BNZ and Westpac.

The report suggests that the industry lacks disruptive forces that could drive change and bring benefits.

The report did not call for breaking up the big banks, and there was no indication that the final report would include drastic measures.

The draft report also recommends the government examine how to strengthen (https://www.rnz.co.nz/news/business/524216/how-a-kiwibank-sale-might-work

Kiwibank increases capital.

When it comes to competition in home lending, the retail banks’ largest business, the committee noted that price matching by the big banks reduced the incentive for banks to compete vigorously on interest rates.

But Leigh Hodgetts, national manager of the Finance and Mortgage Advisers Association, said New Zealand’s interest rate environment was highly competitive and the council needed to better understand how advisers could help.

“The benefit to the Commerce Commission is that they have a better understanding of how mortgage advisers can help consumers or borrowers get a better deal from a bank,” she said.

Hodgetts said a better deal might revolve around interest rates, offering benefits to borrowers, better terms or cash back.

Hodgetts has previously criticised the commission for having a “lack of understanding” of how the consultancy industry works.

A particular pain point for mortgage advisers is that the committee said advisers could face conflicts of interest with clients because of certain incentives for recommending lenders.

Hodgetts wants the comments removed and says advisers work for clients, not banks.

She said the association met with the committee after the draft report was released and provided feedback on how the mortgage and financial advice industries were working.